Halliburton: Oil prices to spike in 2020 after massive industry cuts

Oil prices

Mark Richard, Halliburton senior VP for global business development, says $2 trillion cuts in investments will lead to a shortfall in crude and a spike in oil prices.

Oil prices tumbled to a low of $26.05 in February 2016

Halliburton believes the worse crash in oil prices in a generation will lead to a spike in oil prices by 2020.

The global glut of crude has resulted in tumbling oil prices and has forced oil companies to cut about $2 trillion in investments, according to the oil services giant.

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Speaking at the World Petroleum Congress in Istanbul on Wednesday, Mark Richard, Halliburton’s senior vice president for global business development, said the cuts will weigh heavily on the market in the coming years when oil supplies cannot keep up with demand.

“Sooner or later, the market is going to catch up,” Richard said. “You’ll see some kind of spike in the price of oil. Maybe somewhere around 2020-2021, but it’s got to catch up sooner or later.”

So far, the downturn in oil prices from over $100/barrel in the middle of 2014 to a low of $26.05 in February 2015 has cost over 400,000 jobs and forced hundreds of companies into bankruptcy.

According to Bloomberg, oil exploration companies in North America were the first to return to work and increased their spending 10 times faster than the rest of the world.

Richard says he hopes the international markets, whose massive projects take longer to turn around, hit rock bottom in the first half of this year.

“All of our major clients are working to bring the total cost down internationally,” he said. “It depends how quickly we can get to those price points and how quickly our customers are able to see that their investment is going to be solid for the long term.”

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